Bitcoin price took a plunge as Mt Gox highlights Bitcoin flaw
Mt. Gox has issued an official statement which blamed a critical flaw in the cryptocurrency for their decision to halt all Bitcoin withdrawals. To address the concerns raised by users, the company said that it is working hard to resolve a technical issue that is preventing Bitcoin transfers.
The Japan-based exchange has suspended Bitcoin withdrawals since late last week as the technical team is investigating the problem with the way Bitcoin withdrawals are processed. The defect which is known as transaction malleability which allows third parties to alter the hash of a new transaction without invalidating the signature. Mt. Gox further explained that, “of course only one of the two transactions can be validated. However, if the party who altered the transaction is fast enough, for example with a direct connection to different mining pools, or has even a small amount of mining power, it can easily cause the transaction hash alteration to be committed to the blockchain.”
However, Mt. Gox pointed out that currency withdrawals and Bitcoin transactions to any Mt. Gox Bitcoin address would not be affected by the issue.
“The problem we have identified is not limited to Mt Gox, and affects all transactions where Bitcoins are being sent to a third party,” the company said in a statement. “We believe that the changes required for addressing this issue will be positive over the long term for the whole community. As a result we took the necessary action of suspending Bitcoin withdrawals until this technical issue has been resolved. Mt. Gox will resume Bitcoin withdrawals to outside wallets once the issue outlined above has been properly addressed in a manner that will best serve our customers.”
Since the announcement, Bitcoin price took a deep plunge from $680 to around $538, but made a turnaround shortly thereafter, and the currency is valued at $674 at the time of writing. As a matter of fact, Mt. Gox has done more harm to the market with it’s announcement than good to themselves.
Transaction malleability issue is not something new and it is a known problem since at least 2011. The announcement has raised a lot of response from redditors and some even believes that Mt. Gox may be using the technicality issue as a delaying tactic. What do you think of Mt. Gox’s statement? Share with us in the comments below.